Gupta Ltd. issued 1,000 equity shares of ₹100 each as fully paid-up, to the vendor, in consideration of the purchase of plant and machinery worth ₹1,00,000. Which of the following entry will be recorded in the company's journal for it?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Vendor A/c Dr. 1,00,000 To Share Capital A/c 1,00,000.
On purchase of plant & machinery, the journal entry will be-
Plant & Machinery A/c Dr. 1,00,000
To Vendor A/c 1,00,000
On issue of share, the journal entry will be-
Vendor A/c Dr. 1,00,000
To Share Capital A/c 1,00,000